How Mining Stocks make a difference

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Best Canadian Mining Stocks TSX: Plus Gold Stocks, Canadian Diamond Mines and more.

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Comments

    • TSI Research 

      Thanks for your comment. Alamos Gold trades at a more reasonable multiple of its cash flow per share.

      We think that the best measure of the ability of a company to pay dividends is cash flow from operations (before working capital changes), rather than earnings per share.

      Earnings per share includes a number of non-cash items such as depreciation and amortization or depletion….and earnings are not always an accurate reflection of a company’s health or ability to pay its dividend.

      The best examples of this are real estate and resource firms, including mining stocks. For example, real estate companies are not as concerned as industrials in putting profits aside to replace depreciated/obsolete plant and equipment…they can buy a new property and take out a new mortgage.

      We do look at earnings per share…but we find (as do the majority of analysts, brokers and so on) that cash flow per share is a better measure in some cases.

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